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How Educators View Financial Advisors

It takes a certain type of person to decide to spend their entire professional life educating others.

Teachers are practically required to be outgoing and willing to interact with others. They not only have a desire to teach others, they often spend their free time educating themselves.

As investors, educators are cautious but willing to learn more about their investment options. Advisors working with educators will find their relationship with those investors to be colored by the careful manner educators perceive advisors.

While educators are often viewed as some of the hardest-working people in the United States, they are also often well-rewarded with both salary and pensions. Educators who teach for decades can end up being relatively wealthy by the time they reach retirement age, and that fact is borne out in the research Spectrem does on affluent investors.

Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, Educators are the fourth-most frequent occupation behind Professionals (doctors, lawyers and accountants), Senior Corporate Executives and Managers. Among Millionaires with a net worth between $1 million and $5 million, Educators climb to third behind Managers and Professionals, and among Mass Affluent investors with a net worth under $1 million, Educators are second behind Managers.

Because of the proliferation of Educators among affluent investors, Spectrem compiled results from a year’s worth of research to look at how Educators view their wealth and what they do with it. As part of that research, Educators were asked to describe their feelings about financial advisors.

For instance, according to Spectrem’s Get Schooled on Educators, investors working in education are less likely to have negative perceptions of advisors. For instance, 56 percent of Educators believe advisors are biased towards a certain group or type of product. That is an unfortunately high percentage, but not as high as the general population of investors, among whom 61 percent believe advisors are biased towards certain products.

Similarly, 41 percent of Educators believe financial advisors are more concerned with selling products than with helping their client. Another unfortunate statistic, but lower than the 47 percent of all investors who think that way.

So Educators are less likely to think negatively about advisors and the products and services they offer. They also are less critical of advisors’ performance; 46 percent of Educators rate their advisor on how they perform relative to the stock market, while 51 percent of all investors rate advisors in that manner.

Almost 80 percent of Educators use financial advisors, slightly higher than the average. But Spectrem’s study looked at the investors who do not use advisors and found that Educators who do not employ an advisor’s services are more likely to claim they either cannot afford an advisor or do not have enough assets to warrant having an advisor.

Top Takeaways for Advisors

What the Spectrem research shows is that investors from the field of education are more likely to use a financial advisor and are often less critical of advisors than investors in other occupations are. It sounds like advisors would be wise to advertise where educators might be looking for financial assistance.

Because they are one of the few fields that still has pensions attached to their portfolio, Educators are very likely to need assistance with how to balance their pension, defined contribution or IRA accounts and other savings vehicles as retirement approaches. An advisor with a solid understanding of pension distribution will be of great service to Educators who are approaching their years beyond the classroom.